itBit Bitcoin Market Report: April 2016

In March, the bitcoin price was down about 4%, on par with the digital currency’s performance year-to-date. Global equity markets rallied and outpaced bitcoin in March while commodities had a mixed month (oil was up while gold was down).

2016 YTD Bitcoin Price Chart

The ongoing stalemate in the block size debate and the resulting uncertainty has contributed heavily to the stagnation in the bitcoin market. Finding a compromise and resolution look unlikely as of this writing as all sides in the debate have dug in their heels. Interestingly, the raging block size debate has helped Ethereum (ETH) gain traction and spike in price as traders look to diversify their crypto holdings.

April Price Outlook

The bitcoin price has been range bound all year and March was no exception. A major volatility squeeze is coming. Volatility and volume have been sitting at low levels, indicators of an impending move.

The price of bitcoin has mostly held above key support in 2016, which stands between $400-$415. If the price breaks through support, its going to break hard. The next support level below $400 would be the “Mike Hearn Low” from mid-January, around $360. For a bullish breakout, the price would need to get above to two key overhead resistance levels at $438 and $455.

Key Macro Event to Watch in April

Yuan devaluation

Recent evidence suggests China’s economy is beginning to stabilize. This has come as the US dollar has weakened in recent months allowing for the Chinese government to devalue the yuan. If the government is comfortable with how their economy is stabilizing, perhaps the PBOC will allow for the yuan to continue its devaluation.

Past yuan devaluations have had a positive impact on Chinese bitcoin exchange trading volumes and the price of bitcoin. In her latest speech, Janet Yellen was cautious on the global economy and any US rate hikes in the near-term. This offers the PBOC good cover to continue devaluing the yuan and should help increase volumes on Chinese bitcoin exchanges.

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